The Commodity Futures Trading Commission
("Commission") has reason to believe that Eron Demian Read,
individually and d/b/a New Age Trading Techniques ("Read/NATT")
has violated Sections 4ba(i) and (iii) and 4o(1) of the Commodity
Exchange Act (the "Act"), 7 U.S.C. §§ 6b(a)(i) and
(iii), 6o(1), and Section 4.41(a) of the Commission's
Regulations, 17 C.F.R. § 4.41(a) (1999); and that Global Futures
Exchange & Trading Company ("Global") violated Sections
4ba(i) and (iii) of the Act. Therefore, the Commission deems it
appropriate and in the public interest that administrative proceedings
be, and hereby are, instituted to determine whether Read/NATT and Global
engaged in the violations set forth in this Order and to determine
whether any Order should be issued imposing remedial sanctions.

II.

In anticipation of the institution of this
administrative proceeding, Read/NATT and Global have each submitted an
offer of settlement ("Offer"), which the Commission has
determined to accept. Without admitting or denying the findings of this
Order, and without to any adjudication on the merits, Read/NATT and
Global each acknowledge service of this Order. Read/NATT and Global
consent to the use of the findings in this Order in this or any other
proceedings brought by the Commission or to which the Commission is a
party.1

III.

The Commission finds the following:

A. Summary

Eron Demian Read ("Read"), d/b/a
New Age Trading Techniques ("NATT"), sells a commodity trading
system and related services through an Internet website. Through NATT,
Read offers a computer trading course, a training manual, "daily
trade logs", an opportunity for customers to participate in and be
tutored in chat rooms by e-mail, and trade "indicators." He
offers to customize these indicators to fit a customer's personal
trading style. Through his website and advertisements in trading
publications, Read conveys a false impression that he is actually trading
the market and providing live commentary as the market trades. In
addition, Read/NATT agreed with Global, an introducing broker, to post
Global's offer of a rebate on his website. The manner in which this
rebate offer was presented to the public gave the false impression that
the cost of any NATT products purchased could be recouped through an
immediate credit to a Global brokerage account.
2

B. Respondents

Respondent
Read/NATT

Eron Demian Read, individually and d/b/a New
Age Trading Techniques, is a sole proprietorship located at 12358 Ventura
Boulevard, Suite 273, Studio City, CA. 91604. Read became a registered
CTA in February 2000. Prior to February 2000, he was not registered with
the Commission in any capacity.

Read, through NATT, sells various products
and services to assist customers in "daytrading" the S & P
500 futures market. Read began doing business as NATT in January 1998. By
early November 1999, Read was selling his products and services through
an Internet website with the address www.natt.net.

Through his website, Read solicited
customers to purchase a futures daytrading method through a
"one-on-one" instructional course conducted via e-mail, a
trading concepts manual and trade "indicators." The trade
indicators are described as a mechanical system that provides trading
signals. Read offers to customize the indicators to fit a customer's
personal trading style. Additionally, Reed offers a trading course which
includes daily trade logs that purport to be a record of actual
daytrading. Read also offered "real-time" instruction via an
Internet chat room.

Claims Concerning Actual
Trading

The description of Read's service
conveyed a false impression that Read was actually trading when in fact
Read had not traded since early 1997, and then for only two months. For
instance, on his website, Read claims:

· "This course reinforces its
trading techniques through a live trading chat room. Eight trading
sessions, twice per week, from market open to close, your instructor
will trade the markets and explain each and every trade to you
LIVE in real-time." (emphasis in original)

· "Trades illustrated in this
log mostly refer to trades being considered for the commentator's
own accounts(s). The commentator may occasionally trade for
non-solicited accounts in addition to his/her own
accounts(s)."

· "The Daily Trade Log documents
minute by minute, bar by bar, the thought process of the instructor as
it occurred in real-time. This incredible service allows you to
participate in the logistics of a trade. *** Since the instructor is
trading for real, it heightens the reality of the trade."

The website purports to provide a disclaimer
about actual trading. However, the disclaimer only adds to the false
impression that Read is actually trading because it states that only some
trading is hypothetical and that the hypothetical trading is clearly
marked. For instance, under the heading "Disclaimer", the
website provides, among other things:

· "There are days or times when
the trades shown in the Daily Trade Log are created in retrospect
(these trades are clearly labeled)."

· "CFTC Disclaimer: There are
days or times when the trades shown in the Daily Trade Logs are not
actual, which are marked and then the following CFTC disclaimer may
apply."

Despite these statements, in most instances,
the website and Daily Trade Logs failed to specify which trades were the
result of hypothetical or simulated trading.3 In fact, but for some trading in early 1997,
all the trades are hypothetical.

Read's
Advertisements

In addition to the materials on his website,
Read placed advertisements in various industry publications. The
advertisements read, in relevant part:

· "Learn this new revolutionary
methodology for day trading the S& P. Watch us trade live in
real-time via the Internet!"

The facts that Read had not traded since
1997 and that the trades were not live but were hypothetical make the
advertisements and claims fraudulent and deceitful.

The Agreement Between
Read and Global

On December 10, 1998, Global, entered into a
written promotion agreement with Read in which Global agreed to issue
"credit directly or through rebate of commissions spent to the
trading account" to any NATT customer who opened a trading account
with Global. This agreement explicitly set out the specific language of a
"Special Offer" that Read presented to his customers on the
website. The "Special Offer" stated in part:

"[I]f [the customer purchases] either
the NATT basic course or the NATT complete package, [Global] agrees to
apply the same amount of monies [the customer has] paid to NATT into
[the customer's] trading account with this firm",

and

"[Global] will credit [the
customer's] brokerage account for the amount of [his/her] NATT
purchase, either directly or indirectly through rebate of commissions
spent."

These representations gave the false
impression that Global would provide an immediate credit of the amount a
customer had spent on NATT trading systems in the customer's trading
account, reimbursing the customer for his or her outlay for the course
and providing a risk-free amount of money with which to begin trading.
Read added to this false impression by also posting a website promotion
that read, in part: "[H]ave a broker pay [in full] for the NATT
course."

In reality, Global's "rebate"
was $5 off each $25 commission paid by the customer for a round-turn
trade. In order to recoup the $1600 average price for the NATT complete
package, a customer would have to have engaged in 64 round-turn trades at
a cost of thousands of dollars. Therefore, the impression created by Read
and NATT and Global that Global would provide an immediate and full
credit was false and misleading.

D. Legal Discussion

VIOLATIONS OF THE ACT AND
COMMISSION REGULATIONS

1. Read Violated Sections 4b(a)
(i) and (iii) of the Act

Sections 4b(a)(i) and (iii) of the Act
provide that it shall be unlawful, in or in connection with any order to
make or the making of a futures contract, for or on behalf of any other
person, (i) to cheat or defraud, or attempt to cheat or defraud, such
other person, or (iii) willfully to deceive or attempt to deceive such
other person by any means whatsoever in regard to any such order or
contract or the disposition or execution of any such order or contract,
or in regard to any act of agency performed with respect to such order or
contract for such person. Misrepresentations and omissions of material
facts made with scienter regarding futures transactions constitute fraud
under Section 4b(a) of the Act.4
Additionally, Sections 4b(a)(i) and (iii) require that the material
misrepresentations and omissions of material facts be made "in
connection" with futures transactions.5

Read represented that he was actually
trading and that customers could observe him trading knowing that he was
not actually trading and that his daily trade logs were not based on
actual trading, but rather on hypothetical trading. A statement is
material if a reasonable investor would have considered the information
important in making a decision to invest. Sudol v. Shearson Loeb
Rhoades Inc., [1984-1986 Transfer Binder] Comm. Fut. L. Rep.(CCH)
¶ 22,748, at 31,119 (CFTC September 30, 1985). "Because
simulated results inherently overstate the reliability and validity of an
investment system, and because extravagant claims understate the inherent
risks in commodities trading, a reasonable investor would find [such]
fraudulent misrepresentations to be material." R&W Technical
Svcs., 2000 WL at *3. See alsoCFTC v. Skorupskas, 605
F. Supp. 923, 933 (E.D. Mich. 1985) (misrepresenting performance tables
as being actual trading results violated Section 4b of the Act).

Read's misrepresentations were "in
connection" with futures transactions because he was marketing a
trading system that was designed as a tool specifically for use in the
futures markets, he offered to customize those systems to his
customers' personal trading styles, and his advertisements for his
trading system were fraudulent and deceptive. R & W Technical
Svcs., 2000 WL at *22 (finding that the marketing of computerized
trading systems not merely as computer software, but as a tool
specifically for use in the futures markets satisfied the "in
connection with" requirement); Skorupskas 605 F. Supp at 933
(fraudulent advertisements for a computerized trading system can satisfy
the "in connection with" requirement under Section 4b of the
Act).

The "Special Offer" for a rebate
that Read set out in the website by agreement with Global gave the false
impression that Global would provide an immediate credit of the amount a
customer spent on NATT trading systems into the customer's trading
account when, in reality, Global only provided $5 off a $25 commission
per trade. Misrepresentations concerning fees, commissions and likelihood
of profit violate Section 4b of the Act. CFTC v. Crown Colony Options,
Ltd., 434 F.Supp 911, 917-918 (S.D.N.Y. 1977).

Read's misrepresentations were also
"in connection with" futures transactions because the promotion
for a "rebate" was a marketing tool used to attract customers
to purchase Read's trading system and to open a commodities trading
account and trade through Global. Skorupskas 605 F. Supp at 933.
Read's representations were material because a reasonable investor
certainly would consider an offer providing for a credit or rebate to a
brokerage account in deciding where to open a commodity trading
account.

Read made the misrepresentations with the
requisite scienter. Misleading statements are made with scienter when
they are committed intentionally or with reckless disregard. R & W
Technical Svcs., 2000 WL at *20. Read prepared the written agreement,
including the wording of the "Special Offer" contained in the
agreement that created the false impression that NATT customers could
recover all of the money spent on NATT materials immediately if they
opened trading accounts. As a professional, Read knew or recklessly
disregarded the fact that no independent broker would rebate $1600
immediately to a new customer without linking it to actual business and
continuing business. Therefore, Read acted with scienter in putting the
offer on his website. Id.

2. Read Violated Section
4o(1) of the Act and Section 4.41 of the Regulations

Section 4o(1) of the Act prohibits
CTAs from (a) employing any device, scheme or artifice to defraud any
client or participant or prospective client or participant, or (b)
engaging in any transaction, practice, or course of business which
operates as a fraud or deceit upon any client or participant or
prospective client or participant. Section 4.41(a) of the Regulations
prohibits a CTA or principal thereof from advertising in a fraudulent or
misleading manner.

In order to establish a violation of Section
4o of the Act and Section 4.41 of the Regulations, the Division
must prove that respondent was (i) a CTA or, with respect to Section
4.41(a) of the Regulations, a principal thereof, and (ii) either (a)
employed any device, scheme, or artifice to defraud any client or
prospective client, or (b) engaged in any transaction, practice,
or course of business which operates as a fraud or deceit upon any client
or prospective client. Section 4o(1) of the Act, which also
requires the use of the mails or any means or instrumentality of
interstate commerce, prohibits both registered and unregistered CTAs from
defrauding their clients.6

Under Section 1a(5) of the Act, in order to
establish that someone is a CTA, it must be shown that the person (i)
advised another about the value or advisability of trading in futures
contracts, (ii) "either directly or through publications, writings
or electronic media," (iii) for compensation or profit, unless that
person is "the publisher or producer of any print or electronic data
of general and regular dissemination, including its employees" if
such publisher's or producer's provision of commodity futures
trading advice is "solely incidental to the conduct of [its]
business or profession."7

Read gave commodity futures trading advice
for compensation or profit and, therefore, he is a CTA, and was a CTA
even before he registered as such.8
Read's advertisements, promotional materials and website that all
make claims about actual trading that were false, and Read's
agreement to place Global's deceptive offer to customers on his
website violate Section 4o(1) of the Act and Section 4.41(a) of
the Commission's Regulations for the same reasons they violate
Sections 4b(a)(i) and (iii) of the Act.

3. Global violated Section
4b(a)(i) and (iii) of the Act

Global and Read/NATT entered into an
agreement that Read/NATT would promote the fraudulent rebate offer on
Read's website. That agreement expressly set forth the language of
the offer to be posted on Read/NATT's website. Global thus knew the
terms of the posted offer did not comport with the actual terms of the
rebate. Therefore, Global knowingly violated Section 4b(a)(i) and (iii)
of the Act by falsely representing the rebate offer.

IV.

Offer of Settlement

Read and Global have submitted Offers of
Settlement ("Offers") in which they, without admitting or
denying the findings in this Order: (1) admit the jurisdiction of the
Commission with respect to all matters set forth in the Order; (2)
acknowledge service of this Order; (3) waive the filing and service of a
Complaint and Notice of Hearing; a hearing; all post-hearing procedures;
judicial review by any court; any objection to the staff's
participation in the Commission's consideration of the Offers; any
claim of Double Jeopardy based upon the institution of this proceeding or
the entry of any order imposing a civil penalty or any other relief; and,
all claims which Read or Global may possess under the Equal Access to
Justice Act, 5 U.S.C. § 504 (1994) and 28 U.S.C. §2412 (1994)
as amended by Pub L. No. 104-121, §§ 231-32, 110 Stat. 847 and
Part 148 of the Commission's Regulations, 17 C.F.R. § 148.1
etseq., relating to or arising from the Order; (4) stipulate
that the record basis on which the Order may be entered consists solely
of the Order and the findings consented to in the Offer, which are
incorporated in the Order; and (5) consent to the Commission's
issuance of this Order, which makes findings set forth below and (a)
orders Read and Global to cease and desist from violating the provisions
of the Act and Regulations that they have been found to have violated;
(b) orders Global to pay a civil monetary penalty as set forth below; (c)
notes the appropriateness of a civil monetary penalty, but does not
impose one based upon Read's demonstrated inability to pay; and (d)
orders Read and Global to comply with the undertakings as set forth in
the Order below.

V.

Findings of
Violations

Solely on the basis of the consent evidenced
by the Offers, and prior to any adjudication of the merits by the
Commission, the Commission finds that Read violated Sections 4b(a)(i) and
(iii) and 4o(1) of the Act and Commission Regulation 4.41(a), and
Global violated Section 4b(a)(i) and (iii) of the Act.

2. (a) Global shall pay Ten
Thousand Dollars ($10,000), which represents a civil monetary penalty.
Global shall pay the total amount within ten days of the date of the
Order by electronic funds transfer, or by U.S. postal money order,
certified check, bank cashier's check, or bank money order, made
payable to the Commodity Futures Trading Commission, and sent to Dennese
Posey, Division of Trading and Markets, Commodity Futures Trading
Commission, Three Lafayette Centre, 1155 21st Street, N.W.,
Washington, D.C. 20581 under cover of a letter identifying Global and the
name and docket number of the proceeding. Global shall simultaneously
transmit a copy of its cover letter and of the form of payment to Phyllis
J. Cela, Acting Director, Division of Enforcement, Commodity Futures
Trading Commission, 1155 21st Street, N.W., Washington, D.C
20581; and (b) The Commission is not imposing a civil
monetary penalty against Read but notes the appropriateness of a monetary
penalty. Read has submitted a Sworn Financial Disclosure Statement and
has provided other evidence to the Commission regarding his financial
condition and asserts his financial inability to pay a civil monetary
penalty. Read acknowledges that the Commission's acceptance of this
offer is conditioned upon the accuracy and completeness of his
representations in his Sworn Financial Disclosure Statement and other
evidence he has provided regarding his financial condition. Read consents
that if at any time following the entry of the Order, the Division
obtains information indicating that his representations concerning his
financial condition were fraudulent, misleading, inaccurate or incomplete
in any material respect at the time they were made, the Division may, at
any time following the entry of the Commission's Order, petition the
Commission to (1) reopen this matter to consider whether Read provided
accurate and complete financial information at the time such
representations were made; (2) determine the amount of civil monetary
penalty to be imposed; and (3) seek any additional remedies that the
Commission would be authorized to impose in this proceeding if the Offer
had not been accepted. No other issues shall be considered in connection
with this petition other than whether the financial information provided
by Read was fraudulent, misleading, inaccurate or incomplete in any
material respect, the amount of civil monetary penalty to be imposed, and
whether any additional remedies should be imposed. Read may not, by way
of defense to any such petition, contest the validity of, or the findings
in, the Order, or assert that payment of a civil monetary penalty should
not be ordered.

3. Read and Global shall
comply with the undertakings as set forth below.

A. Read shall not misrepresent, expressly
or by implication:

1. the performance, profits or results
achieved by, or the results that can be achieved by, users, including
himself, of any commodity futures or options trading system or advisory
service; and

2 the risks associated with trading
pursuant to any commodity futures or options trading system or advisory
service;

B. Read shall not present the performance
of any simulated or hypothetical commodity interest account,
transaction in a commodity interest or series of transactions in a
commodity interest unless such performance is accompanied by the
following statement, as required by 17 C.F.R. § 4.41(b):

Hypothetical or simulated performance
results have certain inherent limitations. Unlike an actual performance
record, simulated results do not represent actual trading. Also, since
the trades have not actually been executed, the results may have under-
or over-compensated for the impact, if any, of certain market factors,
such as lack of liquidity. Simulated trading programs in general are
also subject to the fact that they are designed with the benefit of
hindsight. No representation is being made that any account will or is
likely to achieve profits or losses similar to those shown.

In doing so, Read shall clearly identify
those hypothetical or simulated performance results which were based,
in whole or in part, on hypothetical trading results.

C. Read shall not enter into any
promotional agreement with any brokerage firm or offer any rebate,
credit or other promotion associated with any commodity futures options
trading system or advisory service in connection with any brokerage
account without setting forth the terms of the rebate, credit or other
promotion explicitly and setting forth exactly how such credit, rebate
or other promotion will be earned and applied, and providing examples
of exactly how the dollar amount of any rebate, credit or other
promotion would be determined and by whom it would be
determined.

D. Read shall not represent, expressly or
by implication:

1. the performance, profits or results
achieved by, or the results that can be achieved by, users, including
himself, of any commodity futures or options trading system or
advisory service;

2. the risks associated with trading
using any commodity futures or options trading system or advisory
service;

3. that the experience represented by
any user, testimonial or endorsement of the commodity futures or
options trading system or advisory service represents the typical or
ordinary experience of members of the public who use the system or
advisory service; unless: (i) Read possesses and relies upon a
reasonable basis substantiating the representation at the time it is
made; and (ii) for two (2) years after the last date of the
dissemination of any such representation, Read maintains all
advertisements and promotional materials containing such
representation and all materials that were relied upon or that
otherwise substantiated such representation at the time it was made,
and makes such materials immediately available to the Division of
Enforcement for inspection and copying upon request.

E. Global shall not enter into any
promotional agreement with any Commodity Trading Advisor
("CTA"), whether registered or unregistered, or offer any
rebate, credit or other promotion associated with any commodity futures
options trading system or advisory service offered by a CTA, without
setting forth the terms of the rebate, credit or other promotion
explicitly and setting forth exactly how such credit, rebate or other
promotion will be earned and applied, and providing examples of exactly
how the dollar amount of any rebate, credit or other promotion would be
determined and by whom it would be determined.

F. By neither admitting nor denying the
findings of fact or conclusions of law, Read and Global agree that
neither they nor any of their agents or employees under their authority
or control shall take any action to make any public statement denying,
directly or indirectly, any findings or conclusions in the Order, or
creating or tending to create, the impression that the Order is without
factual basis; provided, however, that nothing in this provision shall
affect Read's or Global's (i) testimonial obligations, or (ii)
right to take factual and legal positions in other proceedings to which
the Commission is not a party. Read and Global will undertake all steps
necessary to assure that all of their agents and employees under their
authority and control understand and comply with this agreement.

Unless otherwise specified, the provisions
of this Order shall be effective on this date.

Dated: May 1, 2000

BY THE COMMISSION

_________________

Jean Webb

Secretary to the Commission

Commodity Futures Trading
Commission

NOTES:

1
Neither Read nor Global consents to the use of the Offer or this Order,
or the findings herein, as the sole basis for any other proceeding
brought by the Commission other than a proceeding to enforce the terms of
the Order. They do not consent to the use of the Offer or the Order, or
the findings herein, by any other party in any other proceeding. The
findings consented to in the Offer or made in the Order are not binding
on any other person or entity in any other proceeding before the
Commission.

2 The
Internet is a highly beneficial medium that facilitates the dissemination
of information, but which also enables potential violators to reach
millions of people worldwide quickly and at very low cost. By this and
other proceedings, the Commission is addressing fraud committed on the
internet to promote the integrity of promotions made concerning commodity
futures and options trading opportunities on the web.

5
Fraudulent statements that induce members of the public to purchase
software that generates specific buy and sell signals for commodity
futures trading satisfy the "in connection with" requirement of
Section 4b(a). R&W Technical Svcs., 2000 WL at 217498 . See
alsoHirk v. Agri-Research Council, Inc., 561 F.2d 96 (7th
Cir. 1977) (noting that the "in or in connection with"
requirement should be interpreted flexibly to include deceptive conduct
that occurs prior to the opening of an actual commodity trading
account).

6 CFTC v. Savage, 611 F.2d 270, 281 (9th Cir. 1979) (enforcement
action charging defendant with making false reports to customers,
engaging in "wash" trades and holding himself out to the public
as a CTA without being registered with the Commission).

7
Section 1a(5) of the Act, 7 U.S.C. § 1a(5). Section 4o(1) of
the Act and Section 4.41 of the Regulations thus do not apply to a CTA
who is "the publisher or producer of any print or electronic data of
general and regular dissemination, including its employees" whose
"furnishing of [advice] ... is solely incidental to the conduct of
their business or profession." This exclusion is designed to protect
incidental publishers of advice, such as general magazines and
newspapers, not publishers who specifically concentrate on commodities
advice. R&W Technical Svcs., 2000 WL at *7.

8 See CFTC v. British American Commodity Options Corp., 560 F.2d
135, 141 (2d Cir. 1977), cert. denied, 438 U.S. 905 (1978)(a firm
that "offer[ed] opinions and advice, and issued analyses and reports
concerning the value of commodities" to customers, was a CTA under
the Act.); Gaudette v. Panos, 644 F. Supp. 826, 839 (D. Mass.
1986) (defendants who represented their advisory skills to be exemplary,
suggested that plaintiffs open a commodity account and then
recommended certain futures contracts for investment were
CTAs).